Tuesday, December 22, 2009

The battle between Subway and Domino's Pizza over baked sandwich superiority just got hotter. After receiving a cease-and-desist letter telling the No. 2 pizza outfit to stop airing its new campaign, Domino's president David Brandon set fire to the document on national TV last night (Jan. 21).

The ad, which was produced less than a week ago and ran on Fox's American Idol, is the latest messaging trumpeting the fact that consumers preferred Domino’s new oven baked sandwiches over Subway's by a margin of two-to-one. The results were part of an independent taste test conducted on Domino's behalf.

The letter arrived from Subway earlier this month. Upon receiving it Brandon challenged his marketing team and lead agency Crispin Porter+Bogusky, Miami, to come up with a plan to leverage it. "I said ‘listen this is a bit if a swipe at us, suggesting there is an integrity issue around the test we did and how we did. I don’t like it,'" Brandon told Brandweek. "It made us want to scream even louder about our two-to-one taste claim results. When they asked me to be in the ad, I had to be a team player.”" Domino's plans to continue running the ad for awhile.

Brandon brushed off the letter because in order to get approval for the campaign, Domino’s had to have the claims reviewed by lawyers as well as the networks. "The requirements are significant and we passed all of them."

Prior to the launch of this new attack ad, Jeff Moody, CEO of the Subway Franchisee Advertising Trust, told Brandweek: "We don't think the test was legitimate and therefore the results are very misleading. The networks would not know enough about the operations of the companies to easily see through the flaws in the research. Therefore, as long as there was a big enough sample they would approve the ads even though they are false."

Moody’s four specific issues were:
1. "They did the comparison against three sandwiches and have written the ads to suggest that the results are relevant across the whole product line."
2. "They did not compare the Domino's Philly Cheese Steak sandwich to Subway's Philly Cheese Steak (which we have as a national product) but rather to our Steak and Cheese. Philly Cheesesteak uses a shaved beef product which is completely different than our Steak and Cheese product so their comparison is invalid."
3. "Subway's whole positioning is that we make customized sandwiches, right before your eyes, with your choice of bread, meats, cheeses, vegetables and sauces. We believe that they made every Subway sandwich the same and based the build on our pictures which include all the veggies. The majority of consumers don't add all the veggies."
4. "The production and consumption conditions weren't reflective of the real world and were biased against Subway. Our subs are cooked one at a time and consumers usually eat them right away in the restaurant, or take them across the street to their office." If the subs were served cold they obviously weren’t as good.

"[Subway is a] big company that is very good at what they do, but we are very proud of our baked sandwich product line. We have every right to shout it from the rooftops," said Brandon. "They tried to get to pizza business which is a direct assault on pizza category. We didn’t whine about it. They had every right to do a taste claim which wouldn’t have worked very well."

Domino’s spent $135 million on U.S. media for the first 11 months of last year compared to the $412 million Subway spent (excluding online expenditures), per Nielsen Monitor-Plus.

Marketers aren’t just bashing their rivals on TV, they’re attacking them behind the scenes in the industry’s self-policing unit, the National Advertising Division.

Disputed claims rose 40 percent in 2008 compared to the prior year. Those included a case in which NAD recommended General Mills yank claims that its Yoplait Yo-Plus has been proven to “regulate digestive health.” This came after Dannon, marketer of Activia yogurt, demurred. Another change came after Cablevision complained about Verizon’s claims that its FIOS service was “20x faster than cable.” Gerber, meanwhile, asked NAD to look into Beech-Nut’s claim that some of its products increase an infant’s attentiveness. NAD recommended Beech-Nut retract the claim.

“The statistics show a more competitive atmosphere,” said Lee Peeler, president/CEO of the National Advertising Review Council, the agency that sets policies for NAD. “Our speculation is when the economy’s not growing that market share is more important than it ever was. Advertisers are being more adventurous and more sensitive to advertising claims.” About 95 percent of such complaints are settled by the NAD. Others are directed to the Federal Trade Commission.

The increase came as comparison ads seemed to jump as well. The past few months have seen a volley of advertising matchups including: Dunkin’ Donuts v. Starbucks, Campbell’s Prego spaghetti sauce brand v. Heinz’s Classico, Burger King v. McDonald’s and Domino’s v. Subway. In all those ads, the challenger has claimed a victory in taste tests over its rival.

While it is unclear whether NAD is hearing claims related to any of those campaigns (the organization’s policy is that all such claims are anonymous until settled), Jeff Moody, CEO of the Subway Franchisee Advertising Trust, told Brandweek, ”We believe the Domino’s ads are misleading and that the research was not done in a way that is either valid nor representative of what real consumers experience.” Among his charges was the fact that Domino’s cherry-picked its test sandwiches for its advertised taste test, so that Domino’s compared its Philly Cheese Steak sandwich to Subway’s Steak and Cheese, rather than its own Philly Cheese Steak sandwich. “Philly Cheesesteak uses a shaved beef product which is completely different than our Steak and Cheese product so their comparison is invalid,” he said.

Russell Weiner, CMO of Domino’s, said the fact that the ads are running is proof that they hold up to scrutiny. “The networks will not put you on the air unless you can provide legal substantiation that everything you did is on the up and up. We are on every network out there,” he said, adding that he thinks Subway is rattled by the ads. “If Subway came out with a pizza that beat us two-to-one, I’d be scared. That means it works. Our sandwich sales are doing very well.”

Analysts said such back-and-forth is symptomatic of a down economy. “In difficult times, marketers often want to cut to a harder, more direct sell and not rely on a softer image-building approach,” said Allen Adamson, managing director of Landor Associates, New York. “It’s a natural tendency.” Donald Sexton, professor of marketing at Columbia University, agreed. “When times change, you have to change your approach. There was a period where emotional benefits were more salient, but maybe emotion alone doesn’t do it anymore and you have to back it up with proof.”

That, however, doesn’t mean that comparison ads are 100 percent effective. Adamson said the approach is “not necessarily the best way to market a product” for various reasons. One is consumer skepticism—viewers of such ads tend to conclude that a test is rigged somehow to show a positive result. Another is confusion in the marketplace; consumers can forget who is making the initial claim. “Consumers can’t figure out who said what to whom and end up tuning out the whole category,” Adamson said.

Nevertheless, comparison ads seem to be used consistently, regardless of the economy. “These things go in cycles,” said Derek Rucker, an assistant professor at Northwestern University’s Kellogg School of Management. Rucker pointed out that Miller Lite had initiated taste tests against Bud Light in 2005, well before the economy went sour.

Campbell rep John Faulkner said his company’s new ads for Prego weren’t driven by the economy. The spots, which broke in December, note that the sauce beat its rival in a blind taste test. “Comparative advertising is a tactic that has been utilized across many categories,” Faulkner said. “Consumers are making a comparison when they get to the store shelf. We believe our ads will help motivate consumers to purchase our brands.”

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The content of this blog is for *educational purposes only*. It contains article clippings from various publications that I found interesting & might be insightful for you, marketers.The trademarks, copyrights & materials featured herein belong to respective authors/publishers.